HOW CAN i GET STUCK PAYING THE IRS BECAUSE I AM 1099?

Question

I MADE GOOD MONEY LAST YEAR BUT WITH RENT, CAR PAYMENTS, CHILD CARE AND RAISING 3 KIDS I BARELY SURVIVED LAST YEAR NOW MY TAX GUY IS SAYING I OWE $9,000 TO IRS HOW IS THAT POSSIBLE????????

Answer 1

Self employment tax! You are paying 15.3% of your income for SE taxes.

Answer 2

You owe a lot because you didn't have taxes deducted during the year like people who were employees and got a W-2. Since you didn't pay then, and didn't make quarterly payments like you were required to, you owe it all now.

For income tax, you're paying the same amount as you would have if you were working as an employee with a W-2. But for social security and medicare, you would have had 7.65% withheld from each paycheck - since you had nothing withheld, you owe that now. If you'd been an employee, the employer would have matched what you had withheld for ss and m/care - since you are your own employer, you have to pay the employer half also.

Answer 3

Not sure but sounds like you make alot of money and have little to write-off. 1099 is self-employed so you have to know what to be able to write off on your Schedule C. You are supposed to set aside money or pay quarterly so you don't get stuck with so much at one time. Take a course at H and R Block and learn to do your own taxes. I did and I owed very little because I learned how to write off things I was legally entitled to. Your accountant doesn't have time to teach all of what you should know but should be able to point you in the right direction. If he or she hasn't then you need a better accountant. Blame yourself first. If you are self-employed you have an obligation to know what you need. I lick my chops when I know I can use the Schedule C. There are so many things to write off. I love it. W-2 folks get screwed as does 1099 illiterates.

Answer 4

I had this same problem. I worked for a telemarketing company and I filled out a
W-2 form. What they didn't tell me was that they dont take out taxes for the first 60 days, which would be the 1099. I talked to H&R block and they told me that it's basically considering you as self-employed. The good thing is you should be able to claim gas to and from the job, food and any supplies. I still don't completely understand why they did this, especially without telling me.

Answer 5

If you are receiving a 1099, there is no employer to withhold the income and wage taxes that are required by law. Self-employment taxes (social security and medicare, known as FICA taxes) run at 15.3% of income up to $97,500 of wages. Income taxes will depend on your income tax bracket, anywhere from 0%-35% federal. Make sure your preparer is taking any child care credits and earned income tax credits available.

Answer 6

Because you didn't pay your taxes.

If you had been employed, your employer would have been required to withhold money from your pay and send it to the IRS to prepay your income tax.

But because you were self-employed, YOU are the one required to pre-pay the tax. If you are lucky, all you need to pay now is the tax; but if the IRS finds that you knew you were making money, you could also be hit for interest and penalties for not having made deposits during the year.

Answer 7

sure, that's a predicament. What he's doing isn't legal, and certain you have become the fast end of the stick. yet in case you record type SS-8 with the IRS soliciting for his or her decision of no matter if you're an worker, he ought to easily come to a call he doesn't favor you any better. Your call. Sorry to no longer have any sturdy options. keep all of your tax info, so in case you ever lose the interest, you may record the SS-8.

Answer 8

That's what being 1099'd is. When you are 1099'd by the person or people you do the work for, you are self-employed and 100% responsible for your own taxes. You should have been saving up for them all this time.

Answer 9

Are you the only one in the litter that lived? Did it never occur to you that you did not pay income tax, social security or medicare all last year? It's a little late now to be asking what a 1099 means. Or maybe you just thought Uncle Sugar forgot about you last year....

Answer 10

what am i missing. your tax guy did not explain to you why you owe? If you thought you were an employee instead of an indepent contractor did you talk to your "Employer" about it? This is not a site full of tax experts, try the IRS or your "tax guy".